The game was developed by the Yoshi's Island team, directed by Hideki Konno, and produced by Takashi Tezuka. This was one of the first EAD developed titles that was not produced by Shigeru Miyamoto.

Yoshi's Story was among the first generation of games to support the Rumble Pak. Like most Yoshi games, it is a 2D platformer. It features digitized 2D graphics of high-res 3D models (similar to Donkey Kong Country). These resemble patchworks of fabric and other materials, giving the game a unique look. In interviews and previews, this was dubbed 2½-D.